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State Street Corp. reported a decline in revenue in its second quarter as weaker markets hurt fees generated by the trust bank, though its profit increased on lower expenses.

The Boston-based bank reported earnings of $619 million, or $1.47 a share, up from $418 million, or 93 cents a share, a year ago. Excluding certain one-time items, its per-share profit was $1.46.

Revenue declined 1.3% to $2.57 billion.

Analysts projected $1.26 in adjusted per-share earnings on $2.65 billion in revenue, according to Thomson Reuters.

Chief Executive Joseph Hooley said State Street still views the European investment market as a significant opportunity even after the recent U.K. Brexit vote to exit the European Union. Mr. Hooley said State Street expects lower interest rates for longer but its long-term outlook for its European operations remain unchanged.

Assets under custody and administration declined 3% to $27.79 trillion and assets under management dropped 3.1% to $2.3 trillion from a year ago.

State Street completed its $485 million acquisition of General Electric Co.'s asset-management unit during the quarter.

The results come a day after State Street said it agreed to pay about $530 million to clear a number of lawsuits alleging the custody bank had overcharged clients on foreign-currency transactions. The suits had accused State Street of promising to execute foreign-exchange trades at market price. In reality, they alleged, the bank instead used rates that included hidden markups.

In the quarter, revenue from indirect foreign exchange trading fell 11% to $70 million from the year prior.

Lower assets, domestic and international market declines and lower foreign exchange trading volumes cut into fee revenue. Servicing fees declined 6.1% and management fees fell 3.6% from a year earlier. Fees overall, which represent 80% of the bank's top line, slipped to $2.05 billion, down 1.1% from a year before.

State Street has focused on managing expenses. Late last year, the bank said it was accelerating its cost-cutting plan as it grappled with a challenging environment. Total expenses fell 13% from a year earlier to $1.86 billion, as the prior year's expenses had a $250 million provision for legal fees.

State Street shares, down 8.8% in the past three months, were inactive premarket.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

July 27, 2016 09:45 ET (13:45 GMT)

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